Keep notification rules simple

The Competition Law and Foreign Investment Review Section of the CBA, following up on an earlier submission on the future of competition policy in Canada, is adding a few additional recommendations in a new letter to Innovation, Science and Economic Development Canada.

The most significant recommendation has to do with merger notification. The Section does not believe there is a need to expand the rules to capture more transactions, as most of them are non-problematic. Instead, the rules should be “tailored to avoid notification for categories of mergers that can reasonably be expected not to raise substantive competition issues.”

Further, the CBA letter encourages the government to look at existing provisions with fresh eyes and consider adding more exemptions to notification rules. One example would be minority interest acquisitions, where there is no change in control between two economic actors. Most everywhere in the world those transactions do not require notification, but in Canada they are. Why?

“We recognise that minority interest acquisitions can raise theoretical competition concerns in rare situations,” the letter says. “However, the merger control regime should not be designed to require all transactions to be notified to the government to address a theoretical – and to date never materialised – risk. The notification regime should be selective and focus on transactions most likely to cause harm.”

However, when dealing with the acquisition of a target entity’s components, including shares or interests and assets as well as amalgamation, that it is appropriate to aggregate those components for the purposes of the “target-size” test.